Who was really responsible for blocking investigation of MUS privatization?

Swiss authorities have a problem: if no one is found guilty in the Czech mier MUS case, they could face a massive compensation claim

Nejvyšší státní zástupkyní České republiky, které dle dokumentů blokovalo žádosti o právní pomoc v kauze MUS ze zahraničí, byla v letech 1999 až 2005 Marie Benešová. foto: © ČTK, ČESKÁ POZICE, Richard CortésČeská pozice

Nejvyšší státní zástupkyní České republiky, které dle dokumentů blokovalo žádosti o právní pomoc v kauze MUS ze zahraničí, byla v letech 1999 až 2005 Marie Benešová.

The Swiss investigation into alleged corruption during the privatization of Czech mining firm Mostecké uhelné společnost (MUS), now Czech Coal, has dominated the front pages of the Czech dailies in recent weeks. But most media have presented a fairytale according to which billions of crowns are waiting in Switzerland to be collected by the Czech government with the High Public Prosecutor’s Office in Prague interfering.

The weekly Respekt served the simplest version of the story according to which the former administrators of MUS caused the Czech state damages of over Kč 8 billion, and from the charges it “irrefutably emerges that by not joining [the prosecution] the Czechs would let a large amount of money slip through their fingers.”       

“Those same documents indicate that the brunt of the guilt for the current suspicions of failure [to act by the Czech state] falls upon the Ministry of Finance and the former heads of the High Prosecutor’s Office in Prague,” Respekt editors Ondřej Kundra and Jaroslav Spurný wrote recently.

False constructions

The level of compensation could easily be higher than the amount blocked, which would be an unpleasant burden even for wealthy SwitzerlandCzech Position in no way doubts the fact that the former managers of MUS who were hired by the state and led by Antonín Koláček behaved immorally and that they gradually took over ownership of the company using the firm’s own money. Nor do we dispute that the Czech state lost out while a number of Social Democrat (ČSSD) politicians in power at the time of the privatization pocketed millions of crowns. Nor is it the intention of this article to discuss whether or not Finance Minister, Miroslav Kalousek (TOP 09), and his team committed a criminal offence, and if so, whether potential criminal proceedings are now barred by statutes of limitations.  

We want to show how absurd is the premise whereby up to Kč 12 billion is waiting for the Czech state in Switzerland but due to sabotage by the High State Prosecutor’s Office in Prague this money could “slip through our fingers.” The narrative according to which honest and efficient Swiss police have investigated everything, while their Czech counterparts have not only failed to investigate anything but have obstructed their investigation, is simply naive. 

The reality is far more prosaic. Do you really want to believe that a state would go to such lengths, including dubious visits by the Swiss ambassador to the Czech ministries of finance and justice, simply in order to transfer Kč 12 billion to another state? If the Czech Republic, or another entity, does not declare itself as the aggrieved party in the case, the blocked billions will go the Swiss state coffers if the Swiss courts manage to demonstrate that the money was illegally gained and prove the guilt of the perpetrators. 

In the event of “not guilty” 

There is a potential stumbling block for the Swiss here for they formally lacked both an alleged perpetrator and an aggrieved party in the investigation into the allegedly laundered money from MUS. Thus a possible scenario is that the court will free the defendants and return their money, and then Antonín Koláček and co. will sue Switzerland for compensation for blocking the billions of crowns for five years. And the level of compensation could easily be higher than the amount blocked, which would be an unpleasant burden even for wealthy Switzerland.

Indeed, the most likely explanation for the actions of the Swiss authorities is their concerns over a potential lawsuit for compensation for the blocking of the funds from the MUS privatization. And this is the reason why they are attempting to get the Czech Republic involved. If someone is found, tried, found guilty and jailed here in the Czech Republic over the MUS privatization, the position of the Swiss prosecution would be improved considerably.

It is more likely that no one in the Czech Republic will be jailed over the “managers’ privatization” of the coal mining company. Three investigations into a range of alleged criminal offences committed during the privatization have been suspended and the time limits within which charges can be pressed have passed.

Sluggish Swiss

It was the Supreme State Prosecution Service, and not the High State Prosecutor’s Office in Prague, which is now under fire, which blocked the request for legal assistance.From the hundreds of pages of documents relating to the MUS privatization that the author of this article has collected over the years, it emerges that grave corruption was involved. Back in 2008, an article by this author was published in the weekly Euro which showed that the arms dealer Pavel Musela, who was closely linked to the prime minister at the time of the privatization, Stanislav Gross (formerly ČSSD), received a “commission” of $5 million for his role in the privatization. Nevertheless, the Czech dailies — and the weekly Respekt — did not pay any attention, or were not interested, and did not pursue the case.

And why was the affair not of interest to the Czech police? “Of course we were interested and we immediately requested Switzerland to provide legal assistance and all information about the provision, including information about whether some of the money was transferred to others, and if so to whom,” a source in the Czech police who wished to remain anonymous, told Czech Position.

We intend to look into corruption in the case in a further article because the materials we have obtained contain interesting information which has not yet been published. But let’s now return to the question as to why the Czech police did not dedicate more effort to investigating the MUS privatization, why they didn’t map the flow of money, and why they didn’t request Switzerland, Liechtenstein, and other countries involved for legal assistance, and the consequent accusations that the officials in the High Prosecutor’s Office in Prague are bad, or incompetent. Specifically, these accusations have been addressed against the former head of that office, Vlastimil Rampula, and Libor Grygárek and Ladislav Letko.

Loss of legal interest

The privatization of MUS by its management took place in the second half of the 1990’s and the Czech police began investigating the case in 1999. In 2004, when the statutes of limitation were still not applicable, the Czech investigators knew that in order to move the case forward they would require legal assistance from Switzerland and Liechtenstein, to where the money was transferred, but then it was the Supreme State Prosecution Service, and not the High State Prosecutor’s Office in Prague, which is now under fire, which blocked the request for legal assistance.

In 2005, the police again submitted a request to Switzerland for legal assistance regarding the company Appian, which acquired the majority stake in MUS, with the aim of “ascertaining financial flows and the handling of shares in Mostecká uhelná společnost,” as State prosecutor for the Ústi region, Václav Vaněk, wrote in a report on the MUS case in October 2008.       

This report also states that in 2006 investigators submitted additional materials to substantiate their repeated request for legal assistance from Switzerland and Liechtenstein, but the state prosecutor’s office in Most, or the Supreme State Prosecution Service in Brno repeatedly rejected the request. 

From 1999 to 2005, Marie Benešová (ČSSD), now the Social Democrat shadow justice minister, served as Supreme State Prosecutor.  

Then, as recorded on page 234 of the investigation report, in 2007 the Supreme State Prosecution Service issued an explanation for its decision to reject the request for legal assistance. “A loss of legal interest,” by the Czech Republic was the stated excuse.    

Thus it transpires that it was the Supreme State Prosecution Service, and not the High State Prosecutor’s Office in Prague, which blocked the investigation by preventing an exchange of information between Swiss and Czech authorities.   

Orchestrated by ČSSD?  

It must also be pointed out that the Supreme Prosecution Service transferred the case from the High State Prosecutor’s Office in Prague to the State Prosecutor’s Office in Most, which didn’t have adequate expertise to oversee it.      

From 1999 to 2005, Marie Benešová (ČSSD), now the Social Democrat shadow justice minister justice, served as Supreme State Prosecutor. She was put forward for the post by her party. And it was the ČSSD government which sold a large stake in MUS to Antonínu Koláčk and co. for a fraction of its actual value and all of the allegations of corruption connected with the case point to ČSSD politicians, i.e. the $ 5 million commission paid to Pavel Musela from which money was passed on to Robert Sýkora and Jiří Martínek - colleagues and a family members of ČSSD politicians.   

These facts and circumstances cast a very different light on the recent comments by the newly-appointed head of the High Prosecutor’s Office in Prague, Stanislav Mečl, who has replaced Vlastimil Rampula. Prior to taking up his new post in Prague, Mečl served as a deputy to the Supreme State Prosecutor in Brno. In a recent interview with the server ihned.cz, Mečl claimed the Swiss authorities informed the Czech Republic in May 2010 about the possibility of participating in the criminal proceedings involving MUS, and alleged that it was first and foremost the Czech Ministry of Finance which failed to respond.